Western Alliance Bancorporation · NYSE:WAL
Western Alliance Bancorporation — Q2 2024 Earnings Presentation
22 slides from Western Alliance Bancorporation's earnings presentation, Jul 19, 2024
Slide 1: Earnings Call 2nd Quarter 2024
Q2 20241 EARNINGS CALL 2nd Quarter 2024 July 19, 2024
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements that relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Examples of forward-looking statemen
Slide 3: Highlights: 2nd Quarter 2024 Financial Highlights
Highlights 2nd Quarter 2024 | Financial Highlights Net Income EPS Earnings & Profitability Q2 2024 Q1 2024 Q2 2023 Earnings per Share $ 1.75 $ 1.60 $ 1.96 $193.6 million $1.75 Net Income 193.6 177.4 215.7 Net Revenue 771.8 728.8 669.3 Pre-Provision Net Revenue1 285.0 247.0 281.9 PPNR1 ROTCE1 Net Int
Slide 4: Quarterly Income Statement
Q2 2024 Highlights Quarterly Income Statement Q2-24 Q1-24 Q2-23 Net Interest Income increased $57.7 million primarily Interest Income $ 1,147.5 $ 1,055.0 $ 1,000.8 1 from higher earning asset balances and yields Interest Expense (490.9) (456.1) (450.5) Net Interest Income $ 656.6 1 $ 598.9 $ 550.3 M
Slide 5: Consolidated Balance Sheet
Q2 2024 Highlights Consolidated Balance Sheet Q2-24 Q1-24 Q2-23 Securities & Cash increased $1.7 billion, or 8.7%, Securities & Cash $ 21,345 1 $ 19,642 $ 12,284 1 to $21.3 billion and increased $9.1 billion, or 73.8%, Loans, HFS 2,007 1,841 3,156 over prior year Loans, HFI 52,430 2 50,700 47,875 Al
Slide 6: Five Quarter Loan Composition
Q2 2024 Highlights Five Quarter Loan Composition $4.6 Billion Year Over Year Growth Quarter-over-quarter loan increase of $1.7 billion driven by (in millions): Total Loans, HFI $47.9 $49.4 $50.3 $50.7 $52.4 C&I $1,941 Qtr Change +$1.4 +$1.6 +$0.9 +$0.4 +$1.7 CRE, OO 27 Q2-24 Avg. CRE, Non-OO 10 Yiel
Slide 7: Five Quarter Deposit Composition
Q2 2024 Highlights Five Quarter Deposit Composition $15.2 Billion Year Over Year Growth Quarter-over-quarter deposit growth of $4.0 billion as follows (in millions): Total Deposits $51.0 $54.3 $55.3 $62.2 $66.2 Non-Interest Bearing $3,123 Qtr Change +$3.5 +$3.2 +$1.0 +$6.9 +$4.0 Q2-24 Avg. Savings a
Slide 8: Net Interest Drivers
Q2 2024 Highlights Net Interest Drivers Securities Portfolio and Yield Loans and HFI Yield • Securities Portfolio yields increased 21 bps, primarily 6.73% 6.65% 6.77% 6.79% due to an increase in floating rate securities balances 6.48% 4.91% 4.99% 4.87% 4.76% 4.66% $2.0 • Loan yields increased 2 bps
Slide 9: Net Interest Income
Q2 2024 Highlights Net Interest Income Net Interest Income and Net Interest Margin Average Earning Assets & Average Yield • Net Interest Income increased $57.7 million, or 9.6%, primarily due to a higher average earning Dollars in millions Dollars in billions assets balance and lower cost of liabili
Slide 10: Non-Interest Expenses and Efficiency
Q2 2024 Highlights Non-Interest Expenses and Efficiency Non-Interest Expenses and Efficiency Ratio 1 • Adjusted efficiency ratio1 (excluding deposit Breakdown of Non-Interest Expenses costs) decreased 580 bps to 51.5%, driven 66.8% FDIC Special primarily by growth in net interest income 65.2% Assess
Slide 11: Asset Quality
Q2 2024 Highlights Asset Quality Special Mention Loans Asset Quality Ratios • Year-to-date, the aggregate amount of Special Mention Loans and Classified Assets is down $34 1.45% 1.35% 1.27% million 1.01% 0.78% 1.01% 0.89% 0.90% 0.95% 0.93% • Special Mention Loans increased $138 million $694 $668 $64
Slide 12: Credit Losses and ACL Ratios
Q2 2024 Highlights Credit Losses and ACL Ratios Allowance for Credit Losses Gross Loan Charge-offs and Recoveries • Provision Expense of $37.1 million, primarily reflective of net charge-offs and loan growth Gross Charge-Offs Recoveries $10 • Net Loan Charge-Offs of $22.8 million, 18 bps, $10 $11 $9
Slide 13: Key Reserve Level Ratios
Q2 2024 Highlights Key Reserve Level Ratios • WAL remains appropriately reserved as CLNs offer Reserve levels enhanced by credit protection and low loss loan categories credit protection from first losses on covered reference pools in historically low loss loan Adjusted Total Loan ACL / Funded Loans
Slide 14: Strong underwriting standards and risk management support WAL's loss mitigation strategy
Strong underwriting standards and risk management support WAL’s loss mitigation strategy NPLs are not a significant driver of losses for WAL vs. peers • WAL's ACL is >7x LTM charge-offs, which exceeds the peer median of ~5.4x, and covers the last 4 years of charge-offs by over 4x (#2 in peer group)
Slide 15: Capital Accumulation
Q2 2024 Highlights Capital Accumulation Common Capital Levels Regulatory Capital Levels 10.8% 11.0% 11.0% • Continue to exceed “well-capitalized” levels with 10.6% 10.1% CET1 of 11.0% Tangible Common Equity / Tangible Assets1 7.0% 6.8% 7.3% 6.8% 6.7% • TCE / TA decreased 10 bps to 6.7% due to asset
Slide 16: Fortified Adjusted Capital
Fortified Adjusted Capital CET1 capital adjusted for AOCI securities marks & reserves remains solidly above peer median levels Adjusted CET1 (incl. of AOCI Unrealized Securities Marks & Loan Loss Reserves)1 14% 13% 12% 10.6% 10.8%: 75th pctl 11% 9.9%: Median 10% 9.0%: 25th pctl 9% 8% 7% 6% 4 11 r6 r
Slide 17: Tangible Book Value Growth
Q2 2024 Highlights Tangible Book Value Growth Long-Term Growth in TBV per Share1 Tangible Book Value per Share1 7x WAL • TBVPS increased $1.49 to $48.79 from organic WAL with Dividends Added Back earnings Peer Median 595% 6x • Increased 3.2% quarter-over-quarter, non- Peer Median with Dividends Adde
Slide 18: Management Outlook
Management Outlook Previous 2024 New 2024 Baseline Commentary Outlook Outlook Loans (HFI): $50.3 bn L (HFI): +$4.0 bn L (HFI): +$4.5 bn Balance Sheet Growth Deposits: $55.3 bn (YE 2023) D: +$11.0 bn D: +$14.0 bn 10.8% • Incremental capital build above Capital (CET1) (YE 2023) >11.0% >11.0% 11.0% as
Slide 19: Questions & Answers
Questions & Answers
Slide 20: Appendix
NVA Western Alliance Bancorporation® Appendix
Slide 21: Commercial Real Estate Investor Statistics
Commercial Real Estate Investor Statistics CRE Investor Portfolio ($9.6 billion; 18% of Total Loans) Underwriting Criteria and Mitigating Factors • Low LTV & LTC (50% to low 60%) range underwriting in areas minimizes tail risk 59% 59% 59% • Simple capital structure - no junior liens or mezzanine deb
Slide 22: Commercial Real Estate Investor: Office
Commercial Real Estate Investor: Office $2.5 Billion; 26% of Total CRE Investor; 5% of Total Loans Distribution by LTV Underwriting Criteria and Mitigating Factors 37% • Primarily shorter-term bridge loans for repositioning or redevelopment projects • Strong sponsorship from institutional equity and
Western Alliance Bancorporation Common Stock (DE) — Q2 2024 Earnings Presentation on 6ix